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U.S. Supreme Court Rules That A Settlement Offer To The Individual Plaintiff Cannot Moot A Putative Class Action

On January 20, 2016, the U.S. Supreme Court issued its ruling in Campbell-Ewald Co. v. Gomez, affirming the Ninth Circuit’s decision that a defendant cannot moot a putative class action by offering full relief to the individual plaintiff.

In Campbell-Ewald, the plaintiff brought a putative class action against a U.S. Navy advertising partner for its alleged violation of the Telephone Consumer Protection Act (TCPA). Pursuant to the TCPA, a successful plaintiff may recover his actual monetary loss or $500 for each violation, whichever is greater, and damages may be trebled if the defendant willfully or knowingly violated the Act. Prior to the agreed-upon deadline for Plaintiff to file a motion for class certification, the Company filed an offer of judgment pursuant to FRCP 68, offering to pay Plaintiff in full for his personal treble-damages claim. When Plaintiff did not accept the offer, the Company moved to dismiss the case pursuant to FRCP 12(b)(1) for lack of subject-matter jurisdiction, arguing that no Article III case or controversy remained because its offer mooted Plaintiff’s individual claim by providing him with complete relief. The Company further argued that because Plaintiff had not moved for class certification before his claim became moot, the putative class claims also became moot. The district court rejected these arguments, and the Ninth Circuit affirmed.

The Supreme Court granted cert to resolve the conflict amongst the courts of appeal on this issue. Justice Ginsberg, delivering the 6-3 decision affirming the Ninth Circuit’s determination that the unaccepted offer did not moot the case, explained that “[u]nder basic principles of contract law, Campbell’s settlement bid and Rule 68 offer of judgment, once rejected had no continuing efficacy.” Specifically, once Plaintiff rejected the offer, and given the Company’s continued denial of liability, Plaintiff gained no entitlement to the relief the Company previously offered, and thus the controversy still remained active.

The majority opinion declined to assess whether the analysis would have been different had Campbell actually deposited the full amount of Plaintiff’s individual claim in an account payable to Plaintiff and the court then entered judgment for Plaintiff on that amount. The dissenting Justices (Roberts, C.J., joined by Scalia and Alito) noted this to be “good news … that this case is limited to its facts,” and “the majority’s analysis may have come out differently if Campbell had deposited the offered funds with the District Court.” Justice Alito in his additional dissenting opinion went further, noting: “I am heartened that the Court appears to endorse the proposition that a plaintiff’s claim is moot once he has ‘received full redress’ from the defendant for the injuries he has asserted.”

Although the decision removes the ability of employers to dispose of putative class actions by making offer of judgments in advance of a class certification motion, as the dissent notes, it leaves open the possibility that an employer may nevertheless successfully moot a putative class action by making the plaintiff whole (with or without his assent) by depositing the money with the plaintiff or the court. We will have to wait and see if litigants and, more importantly, the courts indeed accept the invitation made by the dissenting Justices.

Compare jurisdictions: Employment & Labor: International

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